Strategies to Achieve Faster, Smarter, More Flexible Inventory Management

In just five years, consumer expectations have flipped – from craving limitless options to demanding personalized, curated experiences.

To keep pace, retailers and brands must transform data to inform faster, smarter, and more agile inventory management strategies.

This guide outlines how allocators, demand planners and category managers can use AI-driven solutions to automate routine inventory management tasks – freeing up time for higher value-added, strategic decision-making.

What’s the ROI of getting inventory management right?

• 6%–18% growth in sales
• 4%–15% improved gross margin
• 5%–30% reduced inventory
• Improved inventory turns – reinvest capital where it drives growth
• Higher GMROI (Gross Margin Return on Inventory) – maximize margin return per unit of inventory invested

Read on for real-world stories about how Centric Software customers leverage AI-driven solutions for inventory success.

• Introduction
• Inventory management challenges to watch
• Key capabilities of leading inventory management solutions
• Business benefits with measurable impact
• Maximize sell through with inventory management
• About Centric Software

Consumers once shopped familiar aisles without a second thought about how products reached shelves. But since the pandemic, supply chain disruption has entered everyday conversation.

Now, rising costs and ongoing economic volatility are pushing retailers to focus on high-performing SKUs and leaner, more responsive inventory strategies. In just five years, retail has shifted from reactive to reimagined. Global disruptions and increasing complexity have highlighted the need for more resilient and agile supply chains, with the talks of a trade and sanctions agenda that “carries out what may be a more unpredictable and volatile policy approach.” [1]

This article outlines how to build faster, smarter and more agile inventory strategies using real-time data.

Discover how allocators, demand planners and category managers can rely on AI-driven solutions to automate routine tasks and make faster, data-informed decisions.

ROI of Getting Inventory Right

6%–18% growth in sales
4%–15% improved gross margin
5%–30% reduced inventory

What does inventory management Include?

• Store allocation & replenishment: Two key inventory management processes that work together to ensure that the right products are available in the right quantities at the right locations where they have the best chance of selling at full price.
• Inventory optimization: The strategic approach that ensures retailers and brands maintain the ideal stock levels, allowing them to meet consumer demand without the pitfalls of dead stock or experiencing product shortages. Success depends accurate, SKU-level forecasting that supports intelligent decision-making.
• Supply planning: Accurately forecast longer term sales and gain supply chain insights for better visibility and stock optimization of finished goods at the distribution center (DC) and supplier level. Automate routine re-orders to free up time to boost vendor and supplier relationships.

Before retailers and brands can implement effective strategies, it is essential to first address the real-world challenges that inventory management solutions are built to solve.

Allocators must work closely with various stakeholders, including store managers, merchandising teams and suppliers—sorting through enormous volumes of complex data, including historical sales, inventory levels, store performance metrics, market trends and other company specific data. This data can be difficult to manage and analyze, particularly for brands or retailers with multiple stores, channels, distribution models or those operating in diverse geographic regions. Managing the allocation process manually is arduous and complex, resulting in disconnected teams and huge margins for error leading to significant challenges faced by retailers today.

Demand Planners play a vital role in ensuring the retail organization can anticipate and fulfil customer demand accurately, while optimizing inventory levels and operational efficiency. Their work directly impacts sales, profitability and consumer satisfaction by aligning supply with demand, which is why the accuracy of forecasting is so crucial to the profitability of the operations. Producing accurate forecasts is challenging due to fluctuations in consumer behavior and competitor activity. It is difficult to keep up with market trends and economic conditions or predict and mitigate risks. Communicating forecasts to stakeholders with differing priorities adds further complexity—and data may become outdated by the time decisions are made especially if relied on past sales as a starting point.

Category Managers oversee all aspects of the category’s performance, including assortment planning, pricing, promotions and inventory management to maximize sell through and market share. To do this, they must stay updated with market trends, consumer behavior and industry developments. Balancing supplier management, promotional planning and price/markdown strategies is difficult without real-time insights.

Buyers require extensive amounts of data insights to identify trends and patterns and keep up to date with current events and cultures to find out which products will create the optimal mix. Manual processes in multiple spreadsheets are time-consuming and error prone. Since buys are typically placed 6 to 9 months in advance, long lead times create forecast error risks as Buyers try to use current selling patterns and trends to make future predictions.

Supply Chain Directors are responsible for the logistics of bringing a product to market, from sourcing factories and suppliers to coordinating inventory shipments and order deliveries. Siloed systems and lack of visibility into real-time inventory flows and disruptions limit their ability to make informed decisions. Ongoing disruptions and economic volatility introduce operational bottlenecks and cost risks.

However, Centric Software® solutions include distinct advantages that enhance profitability and margins for retailers and brands while enabling streamlined retail operations.

Centric Planning™ and Centric Pricing & Inventory™  are purpose-built to help retailers align inventory with demand across all channels, locations and timelines to maximize sell through and margins.

Centric Software streamlines key inventory processes:

• Both Pre & In-season store allocation
• Store replenishment
• Store transfers
• Stock rebalancing

AI-driven inventory optimization enables brands and retailers to balance and optimize inventory across multiple channels and locations, reducing excess stock and minimizing stockouts.

Smart initial allocation uses AI-powered demand forecasts to automate the distribution of new and seasonal articles across stores, channels and locations.

Continuous demand-driven replenishment ensures a consistent supply of stock, preventing stockouts while avoiding over-purchasing of inventory.

Centric Software also enhances the following supply planning processes:

• Forecasting
• Distribution center (DC) replenishment
• Propagation of demand to suppliers
• Key materials planning

Supply planning enables users to forecast sales and demand using various methods, including AI/ML-driven statistical models, while considering seasonal patterns to drive stock management and vendor replenishment.

Inventory management also allows like-item functionality for new item forecasting and sets the optimal reorder point in a multi-level replenishment strategy at the appropriate level of the hierarchy, all while considering lead times.

Trespass is now executing its allocation and replenishment with Centric Planning. Trespass is one of the UK’s most successful outdoor clothing brands, retailing a wide range of products from specialist performance clothing to outdoor sports equipment, selling internationally and exporting to over 60 countries.

With Centric Planning, Trespass benefits from AI-driven insights and smart data use across forecasting, range planning and inventory allocation. The team expects to reclaim 20% of their weekly reporting time, freeing resources to empower faster assortment planning.

“Instead of setting up these massive spreadsheets, it will all be there in one inclusive system, making range planning faster and freeing up time in-season.”

—Kean Martin, Senior Merchandiser at Trespass.

“By forecasting replenishment using AI-assisted suggestions, we expect to reduce markdowns and increase store sales by filtering each SKU into the right location. It’s an intuitive, straightforward, easy-to-use system,” Martin concludes.

Store allocation & replenishment benefits snapshot

• Maximize sell through with more accurate initial allocation and smart replenishment
• Minimize out-of-stocks
• Rebalance inventory across stores
• Maximize item availability and sell through
• Automate the replenishment routine for more user productivity to give individual attention to specific exceptions
• Efficient management of assortment matrix and replenishment parameters

Inventory optimization benefits snapshot

• Improved profitability with margin improvements of 4%–15% by optimizing pricing and inventory management
• Reduced excess inventory by up to 60%, leading to better stock control and lower working capital requirements

Supply planning benefits snapshot

• Drive sales, margin and consumer satisfaction with accurate forecasting and replenishment
• Reduce stock-outs and overstocking
• Maximize item availability and sell through
• Evaluate your replenishment needs faster, accurately and cost-effectively
• Automate the replenishment routine for more user productivity to give individual attention to specific exceptions

Strengthening retail success requires intelligent, data-driven allocation strategies and inventory replenishment methods. In fact, Gartner reports, “As businesses continue to streamline their supply chain, production and logistics operations to remain competitive in the market, the demand for efficient inventory management software has never been higher.”

Yet 41% of businesses still rely on manual methods, 26% still leverage spreadsheets and 26% use third-party software for their day-to-day inventory management operations.[2]

Gartner also notes that retailers and brands are increasingly seeking inventory management software that goes beyond traditional functionality – solutions that enable precision, scalability, and adaptability.

Centric Software’s AI-powered inventory management modules deliver just that: the tools to forecast accurately, allocate dynamically and manage stock intelligently across channels and time horizons.

[1] Nancy A. Fischer, Stephan E. Becker, Aaron R. Hutman, Benjamin J. Cote, Moushami P. Joshi, Ata A. Akiner, Samantha Franks, Erin Kwiatkowski, Marcus Burden, “Trump 2.0 Administration: Anticipated Impacts on International Trade, Sanctions and Economic Policy,” Pillsbury Winthrop Shaw Pittman LLP

[2]Caroline Hogan, “How to Stand Out in Your Category: Buyer Insights for Inventory Management Software,” April 8, 2024, Gartner

Centric Software® (centricsoftware.com)

From its headquarters in Silicon Valley, Centric Software provides an innovative and AI-enabled product concept-to-commercialization platform for retailers, brands and manufacturers of all sizes. As experts in fashion, luxury, footwear, outdoor, home, food & beverage, cosmetics & personal care as well as multi-category retail, Centric Software delivers best-of-breed solutions to plan, design, develop, source, comply, buy, make, price, allocate, market, sell and replenish products.

• Centric PLM™, the leading PLM solution for fashion, outdoor, footwear and private label, optimizes product execution from ideation to development, sourcing and manufacture, realizing up to 50% improvement in productivity and a 60% decrease in time to market.
• Centric Planning™ is an innovative, cloud-native, AI solution delivering end-to-end planning capabilities to maximize retail and wholesale business performance, including SKU optimization, resulting in an up to 110% increase in margins.
• Centric Pricing & Inventory™ leverages AI to drive margins and boost revenues by up to 18% via price and inventory optimization from pre-season to in-season to season completion.
• Centric Market Intelligence™ is an AI-driven platform delivering insights into consumer trends, competitor offers and pricing to boost competitivity and get closer to the consumer, with an up to 12% increase in average initial price point.
• Centric Visual Boards™ pivot actionable data in a visual-first orientation to ensure robust, consumer-right assortments and product offers, dramatically decreasing assortment development cycle time.
• Centric PXM™, AI-powered product experience management (PXM) encompasses PIM, DAM, content syndication and digital shelf analytics (DSA) to optimize the product commercialization lifecycle resulting in a transformed brand experience. Increase sales channels, boost sell through and drive margins.

Centric Software’s market-driven solutions have the highest user adoption rate, customer satisfaction rate and fastest time to value in the industry. Centric Software has received multiple industry awards and recognition, appearing regularly in world-leading analyst reports and research.

Centric Software is a subsidiary of Dassault Systèmes (Euronext Paris: #13065, DSY.PA), the world leader in 3D design software, 3D digital mock-up and PLM solutions.

Centric Software is a registered trademark of Centric Software, Inc. in the US and other countries. Centric PLM, Centric Planning, Centric Pricing & Inventory, Centric Market Intelligence, Centric Visual Boards and Centric PXM are trademarks of Centric Software, Inc. All third-party trademarks are trademarks of their respective owners.